Papa Francisco’s Populist Discourse and the meaning of Evo’s Gift

8/2/2015 Portland, Oregon - Pop in your mints…

During the month of July we found ourselves south of the equator in our second home, Bolivia.  It has been two long years since we have walked the earth there and much has changed.  The following are some observations made on our journey.

First off, it is obvious that money is everywhere.  From the construction of new apartment buildings to a new style of McMansions that are being erected by those who have benefited by the DEA’s absence in this country:  The Cholet.  The same increase in economic activity that we have noted in Portland is evident here in spades.  Everywhere you look, there is a new store, restaurant, cafe, or industrial park, all with the comforts of modern architecture with inimitable South American flair.

The first part of our visit coincided with the visit of the extremely popular Pope Francisco, or “El papa Francisco” as he is known here.  We arrived in Santa Cruz on July 6th, two days before the Holy See arrived.  On the 8th, we listened, along with all of Bolivia, the radio call of his descent and landing at the airport in El Alto.  The radio call resembled the call of a soccer game here, with the announcer screaming “Llegó” with the same passion that they yell “gol” when the home team scores.

As a follower of Jesus of Nazareth, we are ambiguous to the activities of the Pope, who to us is simply another follower of the same Jesus, with a slightly larger following.  In other words, we do not recognize or attribute any special authority nor clairvoyance to the Catholic church that is not available to all believers.

That said, it is undeniable that papa Francisco is something special to the Catholic faithful, especially here in South America, as Francisco  (or Francis, as he is known in the English speaking world), an Argentinian (though you would never know it as he does not seem to swear like a sailor) is the first Pope to hail from the continent.

Having listened to his discourses over two days, it was obvious that Francisco is well schooled in the populist platitudes that the likes of Che Guevara awakened and contemporary leaders Hugo Chavez and Evo Morales have resurrected.

True to the populist playbook, Pope Francisco derides economic inequality and envisions a society where all elements of the economy, the productive sector, distributors, and retailers, all carry out their daily chores in harmony with mother earth and one another.  Where every child can enjoy a happy childhood, every worker enjoy a dignified position, and every elderly person enjoy a dignified retirement.

Evo Morales, the Bolivian President, welcomed Pope Francisco with a unique gift, a crucifix where in the place of the cross, Jesus of Nazareth is portrayed as being crucified on a hammer and scythe, a symbol synonymous with Socialism.

Regalo de Evo a papa Francisco

Was the Pope offended?  Hardly, you see, the artistic origins of the gift lie with a popular Jesuit priest who made what to some is the obvious connection between the Gospel and Socialist doctrine.  There is more to the story behind the gift, which you can read here:

http://www.ehagendaurbana.com.ar/2015/07/el-cristo-del-martillo-y-la-hoz.htm

We bring the whole matter up to state once and for all that the Gospel and Socialism have just one common thread:  The Gospel, or the Good News, is that God forgives, and expects us to do likewise.  Nothing more, and nothing less.  It is the most important spiritual and natural event that has ever occurred, in our lives and the lives of countless others, for it is forgiveness and forgiveness alone that unleashes the supernatural and eternal presence of Yahweh in the here and now.

To the extent that Socialism demands that mankind treat one another as they would like to be treated, it is in harmony with the Gospel.  However, any attempt to enforce what should be spontaneous acts of goodwill towards one another makes a mockery of the Gospel and subjects it to the rules of men.  As we have explored in our economic treatise, Why What We use as Money Matters, rules made by men are incompatible with freedom, which is the reason for the Gospel in the first place.

This Freedom extends to the right to be Socialist, but it does not extend to the right to enforce this destructive doctrine on one’s unwilling fellow man or woman.

We admire the Pope, heck, he gave mass in La Paz with one lung and drew out millions of the faithful in South America.  If he wants to use his enormous platform and the freedom afforded to him by the forgiveness of sins through Jesus of Nazareth to expound upon an idyllic worker’s paradise. more power to him.

The Pope speaks to the Socialist Movements in Santa Cruz de la Sierra, Bolivia:

The danger in the Socialist doctrine is not evident in meaningless platitudes spewed by its proponents, nor is it evident in postulations about goals that are as unattainable as they are unmeasurable, such as universal dignity in work and retirement.  The danger of this poisonous doctrine is only evident in the blood spilled silently over the years in its name.  For when authoritarian regimes are allowed to define and enforce such concepts on a large scale, the previously unimagined economic burdens of such a program fall upon everyone, and the end result is invariably a society that lives and treats each other in a quite undignified manner.

A side note, and certainly fodder for further debate here at The Mint, our Mother-in-law posed a very interesting hypothesis about what may be wrong with Bolivian society, which seems hell bent on self destruction despite the gifts Mother Nature has seen fit to surround it with:  The poisonous union of the lie by two strata of society.

First the rich, or those who come into money, those whom we will call the upper strata of society.  This strata of society learns to lie as a means to maintain or improve their status both within their social circle, which in turn feeds a continuous chorus of lies as a group to the populations which they enslave and exploit.

Second, there are the lies of the exploited populations themselves, who learn to lie as a powerful tool of survival in a society where, to paraphrase President Snow of the Hunger Games, the odds are never in their favor.

The union of the accumulated lies tend to make any society impossible to navigate with any form of moral or ideological compass.  For to run the straight and narrow is to be stabbed in the back, and the lies create the sad and universally acknowledged truth that no one can be trusted.

Into such societies the seeds of Socialist ideology find fertile ground in which to grow and take root in the minds of the underprivileged.  They begin to grow and, like GMO crop production, look good until one realizes that the crops are only viable with a disproportionate quantity of productive inputs, and that they leave the soil and its inhabitants desolate once the massive inputs stop flowing.

It is then that the inevitable bloodshed begins, and no amount of platitudes or lofty goals, whether spoken by the Pope or the President, can stop it.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 2, 2015

Copper Price per Lb: $2.37Oil Price per Barrel:  $46.77

Corn Price per Bushel:  $3.68
10 Yr US Treasury Bond:  2.20%Bitcoin price in US:  $279.31FED Target Rate:  0.14%
Gold Price Per Ounce:  $1,095

MINT Perceived Target Rate*:  0.25%Unemployment Rate:  5.3%
Inflation Rate (CPI):   0.3%Dow Jones Industrial Average:  17,690M1 Monetary Base:  $2,998,600,000,000

M2 Monetary Base:  $11,991,900,000,000

What created the Bolivian Economic Miracle?

10/27/2014 Portland, Oregon - Pop in your mints…

For those who do not follow Bolivian Politics, Evo Morales has one a third term as President of the South American nation we are happy to call our second home.

As Morales is seen as a Socialist hero, his reelection coincided with a deluge of praise for his hand in the Bolivian Economic miracle that has unfolded over the past 10 years from the left.  It seemed to start with an article from the New York Times back in February, which highlights Morales’ success and the paradox that it presents.  On one hand, he is a, well, a proclaimed Socialist.  On the other, he runs a balanced budget and has largely rejected the advice of the IMF and other financial overlords of the world:

Turnabout in Bolivia as Economy Rises from Instability

Then, a widely read article in the Guardian, where the author makes the bold claim that “socialism doesn't damage economies,” which sparked a swift reaction from the neo-con/neo-lib right.

Evo Morales has proved (sic) that socialism doesn’t damage economies

It is true that the Bolivian economy has grown at a mighty pace over the past 10 years, however, to simplify this miracle to solitary policy changes such as the legalization of coca farming, a deeply personal matter for Morales, or other various social policies noted by the authors is to miss the point completely.

As a public service, we present to you today the short list of reasons why Bolivia is experiencing an economic miracle in the eyes of many Westerners:

1)     Benford’s Law, which would account for Bolivia’s rapid relative growth.  As a country, it was near the bottom of many world measures in terms of economic statistics.  As such, things tend to go up from a low level quickly on a relative basis.

2)    Currency policy:  The Boliviano trades tightly with the USD similar to the Yuan.  This is due to the fact that much of the country’s savings are held in dollars.  Currency stability = real growth

3)    Legalize it:  While the legalization of coca is controversial, the removal of regulations has opened up a wild west of trade and attendant economic activity.

4)    Anarchy reigns:  Ever since Simon Bolivar freed it from Spanish rule in 1825, Bolivia has had 81 Presidents and been ruled by various “Juntas” or forms of military rule 9 times.  By contrast, the US has been around for 50 years longer and had just 44 Presidents.  If our theory that Anarchy produces stability holds, it would follow that the Bolivian economy is one of the most resilient on the planet, one that cannot help but grow from a solid base.

5)    Evo’s Charisma:  While Evo Morales is often chided, he is simple and lovable at heart, an anomaly in the cesspool of modern politics.  He has drawn a great deal of positive attention to Bolivia as the first indigenous President in the nation’s history.  This has given Bolivia international exposure not before seen.

6)    The Open Letter:  While it is a longshot, perhaps Evo has read our open letter to him and is secretly implementing our policy proposals.

7)    While Bolivia was extremely poor in the eyes of the world, yet rich in so many ways.

We love Bolivia, it is one of the most precious, pristine, and complicated places on the planet and we are honored to call it our second home.  While speculation as to what has caused the current economic miracle there will continue, we know one thing to be true:

It is Bolivia’s time.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Key Indicators for October 27, 2014

Copper Price per Lb: $3.08
Oil Price per Barrel (WTI):  $80.66

Corn Price per Bushel:  $3.63
10 Yr US Treasury Bond:  2.26%
Bitcoin price in US:  $350.95
FED Target Rate:  0.09%
Gold Price Per Ounce:  $1,225

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  5.9%
Inflation Rate (CPI):   0.1%
Dow Jones Industrial Average:  16,818
M1 Monetary Base:  $2,747,700,000,000

M2 Monetary Base:  $11,514,900,000,000

Natural Law and the Theory of Economic System Fluidity now available!

4/26/2013 Portland, Oregon - Pop in your mints…

We are pleased to announce the release of our latest eBook offering, Natural Law and the Theory of Economic System Fluidity.

Natural Law and the Theory of Economic System Fluidity provides the theoretical basis for allowing the strengths of each economic system to peacefully work together to achieve this end and examines both the natural laws which govern economics as well as the moral basis for the existence of the nation state.

It is volume VI of the Why what we use as Money Matters series, and perhaps the most important, for it forms the philosophical core of our thesis.

We are pleased to offer it in PDF format for free here to our fellow taxpayers at The Mint.

Additionally, it can be had for a mere $0.99 over at Amazon's Kindle store and for free in a myriad of other eBook formats over and at Smashwords.com for the next month.  Be sure to use coupon code: WF75E at checkout to receive the discount.  The offer is good until May 25th, 2013.

Thanks again for reading and all the best!

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 26, 2013

Copper Price per Lb: $3.17
Oil Price per Barrel:  $93.00
Corn Price per Bushel:  $6.44
10 Yr US Treasury Bond:  1.66%Mt Gox Bitcoin price in US:  $138.55
FED Target Rate:  0.13%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,462 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  -0.2%
Dow Jones Industrial Average:  14,713
M1 Monetary Base:  $2,470,700,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,667,300,000,000

Perpetuation of the Trillion dollar coin solution to US Debt

As our site name implies, we have more than a passing interest in monetary theory.  As such, ideas for new types of coin and currency are of special interest.  When the value of the coins proposed contains an insane amount of seigniorage, we are compelled to call it out.

The Fiscal Cliff melodrama playing out in the halls of US Federal Government’s Capital has given rise to the above mentioned monetary insanity.

As the so called, moronic “Fiscal Cliff” false alarm approaches, it becomes more common for those of a Socialist/Statist leaning philosophy to search for easy solutions to what amounts to enabling catastrophic policy failures, out of control spending, and unsustainable debt pacts.

This is not surprising, as Socialism and economics are incompatible philosophies. Anyone who claims otherwise either mistakenly applies small system theory to large scale systems or is a shill. From one of these insane theorists comes the idea of the US Treasury coining a trillion dollar platinum coin to deposit at the FED, who would then cancel the Treasury’s debts.

This will not happen, first and foremost, because the insane monetary system relies on debt as its lifeblood, as such, any debt cancellation by the underlying foundation of US Treasury debt is out of the question.

Second, it must be recognized that coining a trillion dollar coin, theoretically equal to 1/60 of global GDP, that anyone other than the FED would accept at face value, is impossible, it simply flies in the face of reason.  The FED has been paying 100 cents on the dollar for the MBS toilet paper that banks have sold to them for years now, as such, any concept of value left the halls of the Federal Reserve years ago.

The third reason is that the US debt at the FED has already been largely canceled via the FED’s various QE operations over the past several years. For the reasoning as to why the official US Debt held by the FED hasn’t been lowered to better reflect its true drag on GDP, we refer fellow taxpayers back to reason one.

We will present more data to back this claim in the coming week. In the meantime, if someone offers you a trillion dollar coin, be sure to check the spot price of platinum before making a more reasonable counter-offer. In any event, you are better off holding the platinum, as someday it will be worth are least a trillion Federal Reserve notes, the shills at the FED and Treasury have assured it.

Our Theory of Economic System Fluidity: Marx and Rand together in perfect harmony

10/22/2012 Portland, Oregon – Pop in your mints…

In the realm of economic thought, there are two extremes.  On one end of the spectrum sits the economic equivalent of Karl Marx’s workers’ paradise, known as Socialism.  On the other end sits the economic expression of Ayn Rand’s rugged individualism, known as Capitalism.  As anyone who has studied these philosophical extremes can tell you, the operation of real world seems to constantly fall somewhere in the space between the two, making strict adherence to either an indefensible position.

While apologists for these extreme positions do a wonderful job of explaining why complete adherence to their ideals by all would lead to an utopia on earth, a careful examination of the arguments, along with a quick glance at how things operate in the real world, lead one to conclude thatevidence of both Socialist and Capitalist ideals can be found in nearly any system.
How can this be?  If the extremes are both correct in their reasoning, they msut be mutually exclusive of each other.  However, we look around at the world around us, as well as into the depths of our own souls, and we invariabley find an uncomfortable coexistence of ideals that is difficult, if not impossible, to reconcile.

That is, until today.

Our aim today is to reconcile this age old dilemna.  Fret no more, fellow taxpayer, for the answer is simple:  Socialism works for local systems, while large scale systems are best served by embracing Capitalist ideals.

How can this be?  The answer is simple.

Socialism, with its embrace of community property and centralized decision making, is a superior policy for systems until they reach a critical mass.  Socialism unwittingly provides the framework in which society cares for its economically weaker members.  It is a system which is entered into with the understanding that at least a portion of one’s actions will take the form of altruism, that is, they will work for the benefit of others without the expectation of material compensation.  In fact, socialism is the basis for the family unit into which a great deal of humanity enters the world.

Karl Marx

 

Given the barbarities which are justified in the name of profit, it can be said that the basis for morality and human decency most frequently occurs in a Socialist setting.  Given the inherent requirement of altruism, Socialism is the system which asks the individual to look beyond themselves.  However, as we touch on later, Socialism on a large scale tends to bring out the worst in human beings, as the inevitable onset of poverty quickly diminishes any moral advantage that small scale Socialism may enjoy.

We digress on the question of morality for a moment and instead submit to you an insightwith regards to the corporate structure.  It is the revelation that Corporations, entities which are held out as the champions of Capitalism, are, in fact, Socialist institutions (the stunned silence is deafening, please do read on, fellow taxpayer, it will make sense, trust us.)

It is for this reason that wages do not fit well into free market pricing mechanism and instead lend themselves to the “Labour theory of value” which is a base concept of Socialist philosophy.
The logical proof is the following:  The employer, employee relationship is based on a set rate per time period of work.  Once it has been agreed upon, the wage rate ceases to adhere to free market theory and bcomes a component of the Labour theory of value.  The top level managers in corporations that employ persons in an employee capacity become the centralized authorities in what is a socialist realm.

Another proof of this can be found in that property, which is held in the name of the Corporation, is cared for and used by employees.  As such, corporate property, as its name would imply, is held in common by subjects who themselves have no property rights in said property.  They may be offered shares in the corporation themselves, but this does not directly effect their day to day use of the Corporation’s (their employer’s) real and personal property.

A majority of human beings today find themselves as part of a Socialist entity of some sort, be it a family, household, corporation, or governmental employer (which, for purposes of analysis, behaves in a similar fashion to a corporation).  It is within these systems that we have most of our day to day interactions.  It is understandable, then, that most people would see a form of Socialism as the basis for a utopian ideal.

However, the members of these same Socialist organizations, the heads of household, CEOs, heads of government, members of Boards of Directors, salespeople, security personnel, customer service agents, and a host of others, well know that the “esprit de corps” which may exist in their organization is thrown aside in their dealings with the outside world.  The outside world, where individual corporations collide, is marked by brutal self interest and the protection of private property rights which are the hallmarks of Capitalism.

What gives?

Capitalism, the system which honors private property rights and glorifies the pursuit of self interest, must be embraced and allowed to operate in an unhindered state as the basis for the interactions between the small scale Socialist systems (families, corporations with employees, and those brave individuals who choose to face the Anarchic system of the world alone.)

Ayn Rand

The reason that Capitalism must be embraced by the smaller systems is that its principles, namely the laws of supply and demand and the Golden Rule, must be allowed dictate their day to day activities so that the smaller systems can better adapt and survive in a harsh, unforgiving environment.  To put it another way, Capitalism is a superior response to the Anarchy in which we all find ourselves, whether we are willing to admit it or not.

However, apart from its invaluable contributions to understanding the material world, even hard core Capitalists would agree that blind adherence to the Capitalist creed would not only lead to a trampling of those less fortunate in society, but the potential isolation of the individual from human warmth, feeling, and dare we say, loss of the ability to love.

For all of the virtues of Capitalism, its potential frigidness at the individual level and lack of a clear moral compass make it unpalatable to the majority as an absolute ideal.

So the answer is simple.  Socialism operates on a small scale, Capitalism on a large scale.  Marx asks Rand to dance, she accepts, and the world makes sense.  As the theory of biologos attempts to bring harmony to the polarization of two views of the world’s origins, our theory of economic system fluidity allows the economist and politician to embrace both the virtues of the Socialist ideal as well as the Capitalist economic imperative.

The final question which begs to be asked is the following:  In terms of size, at what point is it appropriate for a system to stop being guided by Socialist principles and to break up into units better able to cope with the Anarchic surroundings, meaning a leap to the Capitalist model, which naturally defines the size limitation of what may be called a functional Socialist system?
While there is no firm answer, it is clear that a Socialist system has reached its limit when it is corporately bankrupt and unable to fulfill its commitments, either morally or financially, to its members.

In the case of the corporation, it must adjust its productive activities and/or release either property or employees into the capitalist system until it finds equilibrium.  The released Employees then find themselves, albeit for a moment, in what may be called the free market for labor.  In it, they will either learn to compete perpetually in the capitalist environment and form their own small scale socialist entity, or link up quickly with another socialist entity, be it another corporation, state welfare, or the generosity of a family unit.

The fact that both families and corporations can accumulate wealth are proof that socialist entities can and do compete and thrive in a world where capitalist thinking and political structures are an imperative.  It is the ability of each unit to adapt to changes and to seize opportunities which makes the difference.

There is much more to say about this but it will have to wait for another day.  We leave you with what should now be obvious.  When Socialism is employed on large scales, it looses both its ability to compete as well as any moral superiority which it may have enjoyed.  When persons are thrust headlong into poverty, which is the logical economic end of large scale Socialism, what were once moral imperatives are tossed aside in pursuit of purely Capitalistic aims in a desperate attempt to eat.

Anyone who has lived such an event will attest that it is in these unfortunate circumstances that the rotten core of humanity is laid bare for all to see.  While unbridled Capitalism has its own faults, which are daily brought to light in the media as a reminder of when it has been allowed to run too far.  It is this consciousness, and the human desire for mercy, which work to keep the evils of Capitalism in check.

The beauty of the theory is that the normal operation of each system keeps the proliferation other in check, any attempts by government or sovereigns to impose or preserve one system over the other will end in disaster.

Rushing to extremes is for fools, for the Kingdom of God is one of perfect balance.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 22, 2012

Copper Price per Lb: $3.64
Oil Price per Barrel:  $89.16
Corn Price per Bushel:  $7.61
10 Yr US Treasury Bond:  1.80%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,729 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.8%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,345
M1 Monetary Base:  $2,334,000,000,000
M2 Monetary Base:  $10,199,400,000,000

Don’t be Fooled! June Unemployment Numbers cooked to keep interest rates and wages down

7/8/2011 Portland, Oregon - Pop in your mints…


Sound the alarms! The today the BLS took the pulse of the labor market today and market observers jumped back, aghast that the patient, the US labor market, should be so weak. According to the charts, he was well on his way to recovery. After being in a coma for the past three years, it appeared that he would be back to his old self and dancing in the halls in a matter of months.

Now, the prognosis has taken a turn, albeit a small one, for the worse.

Here at the Mint, we take numbers with a grain of salt. We have nothing against numbers; on the contrary, we are rather fond of them. They give one the ability to appear to make sense of extremely complex phenomena. They make mankind appear intelligent, cunning, even clairvoyant at times.

It should come as no surprise, then, that mankind, specifically those bent on “improving the world,” should place so much faith in them. To understand and interpret numbers and then act on the data gives man a power rush that is exhilarating.

It is a fatal conceit.

It is illogical, perhaps insane, to think that something as complex as creation and the countless phenomena that occur every nanosecond can be adequately expressed (much less understood) in numbers.

On a small scale, such as a family farm, a small town, or even a remote island, numbers can prove very useful. They can provide accurate, timely information about productivity and relative scarcity. In these instances, numbers can be invaluable.

Begin to aggregate theses numbers and try to use them to understand phenomena on a large scale and they become not only devoid of meaning but dangerous.

Why does this happen? Simply because the farther removed that the decision maker reviewing the number is from the processes on the ground, both in space and time, the less able he or she is to react in a coherent manner. This, in a nutshell, is why Socialism, Communism, and any other form of Centralized planning or “world improvement” does not work on a large scale.

With this in mind, we will interpret today’s BLS unemployment numbers for you. Economic observers have been trained to understand that 9.2% unemployment is bad for the economy. Why it is bad, few stop to wonder, but that is a rant for another day.

It is simply understood to be bad, and since the economy needs to be “good,” the world improvers must do something. What will they do? First, they will use this as an excuse for the FED to keep the short term rates insanely low for a longer period of time. This will not create employment but will create hyperinflation.

Second, the US Congress will raise the debt ceiling and resort to the Bush era style of stimulus, they type where every taxpayer gets a check in the mail from the Treasury.

Third, and most importantly, this announcement is a desperate attempt to keep domestic inflation in check. Inflation, and then hyperinflation, will begin once wages increase. The rise in unemployment sends the subliminal message to the working classes that they cannot demand raises because they are just “lucky to have a job.”



Are you really lucky to have a job? The not so subliminal truth is that YOU ARE IRREPLACEABLE AND ARE WORTH MUCH MORE THAN YOU ARE CURRENTLY MAKING!

Lives and economies were never meant to be measured in numbers. Numbers used to make large scale policies generally do more harm than good. Numbers produced by a central authority often are done so either with the intent to deceive or are so untimely and incompetently compiled that they become deceptive as they do not accurately reflect present circumstances.

“Fear not, therefore; you are of more value than many sparrows!”

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S. For more ideas and commentary please check out The Mint at http://www.davidmint.com/

Key Indicators for July 8, 2011


Copper Price per Lb: $4.36
Oil Price per Barrel:  $96.20
Corn Price per Bushel:  $6.72  
10 Yr US Treasury Bond:  3.02%
FED Target Rate:  0.07% JAPAN HERE WE COME!
Gold Price Per Ounce:  $1,544 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.2%
Inflation Rate (CPI):  0.2%
Dow Jones Industrial Average:  12,657  TO THE MOON!!!
M1 Monetary Base:  $2,020,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,112,300,000,000 YIKES!!!!!!!
*See the MINT Perceived target Rate Chart. This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy. This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

The Bill for Club Med comes due (the concept of Central Bankruptcy eloquently explained), a Parable

5/31/2011 Portland, Oregon – Pop in your mints…

Today the focus of the financial world is on events around the Mediterranean where the Greek and increasingly the Spanish people again find themselves at odds with their respective governments and their IMF / ECB / German debt collectors. 

How did they get there?  The Greeks and arguably the Spanish have been living in the social equivalent of a Club Med ever since they joined the Euro.  The initial sting of higher prices was offset for most by lower borrowing costs.  Life was good.  The advent of the Euro along with a boom in tourism began to feed a property boom in Spain and a government spending boom in Greece.

Alas, as an economy slows, the government is usually the last to know. 

Like the father whose family takes a vacation to Club Med, he is content to let the family splurge with little worry as to how he will cover the bill.  "Just throw it on the credit card, we'll take care of it later" becomes the mantra.

Unfortunately for the father (who represents the Greek, Spanish, and arguably the US governments in our parable), his bank decides to cut his credit line just before the vacation is over.  The bill comes due and the man frantically negotiates with his bank (the ECB, IMF, and arguably the US FED) to extend his credit line enough to cover the bill.

Club Med - Paradise Lost!

To make matters worse, upon his return the man finds that the income from his job (the government's tax receipts in our parable) has been cut due to "the economy*."  He now has no realistic prospect of repaying his extended credit line and instead must now consider a painful reduction in the family's standard of living.

Naturally the family, who has developed some expensive habits while away at Club Med, rebels.  The father is now in a no win situation.  On the surface, he appears to have a choice between satisfying his family at the expense of his creditors or vice versa.

In reality, with his reduced income, he cannot satisfy either of them.  This is where the Greek and Spanish governments currently find themselves, and this is where the US Government will soon find itself.

There is, of course, an easy way out.  The man who is in this hopeless situation can declare bankruptcy.  Problem solved, right?  Not so fast.  You see, because of "the economy*," the bank cannot release the man from his debts and have enough money to make good on its own obligations.

At this point, the Central Banks of the world (which are represented by the bank in our parable) lack not only the credibility but also the practical tools to perform their make believe function as protectors of the value of their respective currencies.

Today we read a piece by Michael Pento of Euro Pacific Capital (run by Peter Schiff) which seems to give logical credence to what we have long suspected to be the case:

"In the end, any meaningful attempt to withdraw liquidity will not only bankrupt the institution (The FED) but also zero out their remaining credibility. That's why they'll never even make an honest attempt."

 The FED is helpless to remove the liquidity it has injected and will soon have to decide which of its member banks to sacrifice if the dollar is to continue as a functioning currency.  Our money is on the dollar and all who rely on it as a store of value to be the sacrificial lambs.

Back to our parable.  Both the man and the bank will continue to pretend to negotiate with each other, giving the illusion that what is now their mutual problem will supernaturally disappear.  The family will continue to pretend to debate which expenditures to cut back on as if it will make a difference.

Unfortunately, the likelihood of the problem disappearing is equivalent to the likelihood of the family being able to go back in time to cancel their trip to Club Med prior to departure.  Such is the nature of debt.

So the bank, the father, and the family find themselves clinging to a myth as they helplessly hurtle towards the unknown.

Where will they end up?

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

*Definition of "the economy", circa 2011 – A term used to describe the large scale collapse of Central Banking and the Socialist / Communist economic model that it has created over the past 100 years.  Generally used by politicians and others in authority to "explain" why they cannot pay their obligations.  This explanation is presented to the masses as a failure of capitalism when quite the opposite is true.  Thus, this simple two word phrase is used as an excuse to further the Socialist / Communist agenda and that of the police state that is forming all around the world.

P.S.  Please check out our latest 72 Hour Call at www.davidmint.com

Key Indicators for Friday, May 31st, 2011

Copper Price per Lb: $4.17
Oil Price per Barrel:  $102.83

10 Yr US Treasury Bond:  3.05%
FED Target Rate:  0.09% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,534

MINT Perceived Target Rate*:  2.25% INFLATION HERE WE COME!!!!
Unemployment Rate:  9.0%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,579
M1 Monetary Base:  $1,892,800,000,000 THE CRACK-UP BOOM BEGINS!!!!
M2 Monetary Base:  $9,036,600,000,000 MORE FUEL FOR THE CRACK-UP BOOM!!!!

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

Colors, Protests in Madrid, Greek Employment Crash, and The Chinese Bet on a US Default

5/19/2011 Portland, Oregon – Pop in your mints…

It is a bright and sunny day in Portland, the type of day that makes you feel like you are on another planet.  After seven months of rainfall the sunshine overcomes the gray and the world takes on the most vivid of colors.  It is amazing.  

They are shooting a movie at the old US Customs House these days and today quite a crowd was gathered outside.  We later found that the movie is called "Gone." From what we can tell, it is a teenage thriller of the "Scream" genre and will come out in February 2012.

That explains the school buses and scores of teenage extras roaming the neighborhood.

In Portland people literally hibernate for the winter.  One would think the population figures grossly overstated if they only visited during the rainy months.  Once the sunshine hits, then city springs to life and one wonders where all of these people came from.  It is like living in two worlds, depending upon the season, and the difference is marked here like nowhere else.

Maybe we are on another planet.  We hardly recognize what is going on around us.

The Socialists in Greece and Spain are implementing austerity measures…

The LinkedIn (LNKD) IPO shot to the moon…

The Chinese are net sellers of US Treasury Debt…

And the US Government is going to default.

Are we still on planet earth?  The answer would be a resounding NO from anyone who had fallen asleep in 2006 and been recently awakened to this news.  They would think these are headlines from The Onion.

Yet what once would have seemed absurd is now coming to pass. 

One can no longer chastise the Socialists as spendthrifts.  The Socialist governments of Spain and Greece did not gain power by running on austerity driven platforms.  Yet there they are, forced to do the dirty work as their disillusioned electorates take to the streets in protest.

A union leader in Greece warned of an "Employment Crash" that will occur as the Greek economy digests the latest round of tough love from its fellow Eurozone members.  What exactly is an "Employment Crash"?  From what we can gather, there is not much work being done in Greece at the moment anyhow.

Any reduction would be a mere fender bender.

Then there is the LinkedIn IPO, which at face value appears to be a miracle.  Up 110% on its opening day?  Time to party like its 1999, right?

Upon further examination, the LinkedIn IPO appears to have been a product of an extremely limited stock offering which then shot to the moon without the danger of being sold short.  The market essentially prohibited any short bets being made against the stock, removing any restraint to its initial rise.

This is not how healthy markets operate.  But at this point, mortgage backed securities can be held at face value with no hope of near term price discovery.  Hence, no one in their right mind would pay face value for them, which of course explains why the FED did just that.

And what about the Chinese?  Aren't they raking in Billions of US Dollars in excess reserves each day with which they are "obligated" to buy US Treasury debt?  Yet since January, they have been reducing their holdings.  What gives?

It appears that China, along with Mexico and Bolivia, are pouring these reserves into Gold, infrastructure, anything tangible in anticipation of the debt ceiling debacle in the US spiraling out of control.

Yes, the impasse in Washington appears to be heading towards the "unthinkable," namely the US defaulting on its debt.  We predicted this here at The Mint earlier this year and frankly are shocked that it may take place.  Yet there it is, and the behavior of the Chinese makes us believe that a default is on the horizon.

So will the US give the shaft to its foreign creditors or its domestic dependents?  Maybe the more relevant question is, will the US go to war with China or fight a Civil war?

All we can say is come, Lord Jesus!

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our latest 72 Hour Call at www.davidmint.com

Key Indicators for Thursday, May 19th, 2011

Copper Price per Lb: $4.04
Oil Price per Barrel:  $98.86

10 Yr US Treasury Bond:  3.17%
FED Target Rate:  0.10% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,494

MINT Perceived Target Rate*:  3.25%
Unemployment Rate:  9.0%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,605
M1 Monetary Base:  $1,880,400,000,000 THE CRACK-UP BOOM BEGINS!!!!
M2 Monetary Base:  $9,011,900,000,000 DESPERATION!!!!

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.